In today’s day and age, it seems like companies love giving things away for free. You can get lines of credit almost instantly, credit cards while shopping for groceries, cars regardless of your credit history, and furniture with no payments for two years. While these deals are legitimate, it’s important to remember if something seems too good to be true, it probably is.
This week’s Financial Literacy Month topic is about making informed financial decisions. The more you know and understand about your financial rights and responsibilities, the importance of reading the fine print and the financial professionals you can trust, the easier it is to avoid costly surprises, which can prevent you from achieving your overall financial goals.
To help you learn how to make informed financial decisions and break through the gimmicks, I’ve compiled a list of tips to consider when planning for your financial future.
TIP #1: SHOP AROUND
An important part of a solid financial plan includes choosing the right financial products and services for your needs. Even if you have been with the same financial institution your whole life, it’s smart to shop around, do your research, and choose carefully rather than letting the banks or other financial service providers choose for you. At the end of the day, you understand your lifestyle, financial needs, and situation better than a financial service provider.
TIP #2: READ THE FINE PRINT
Before choosing a particular financial service or product, inform yourself of the fees, rates, terms, and penalties associated with it. It’s necessary to ask questions and read the fine print before signing any agreements for financial products or services. The legal jargon included in the fine print can be very technical, so it’s common not to understand all of it. That said, don’t be shy to ask questions – it’s expected and will allow you to make an informed decision.
TIP #3: DON’T PLAY THE BLAME GAME
I often speak with folks who blame the banks for having sent them a new credit card or for increasing their credit limit. Many find this additional availability of credit to be too tempting to resist. It’s important to know that banks must obtain your permission before they can issue a credit card or raise your limit. Be honest with yourself – if you can’t afford to support the additional credit, then you should turn it down and work towards living within your means.
TIP #4: EXHAUST AVAILABLE RESOURCES
On the other hand, if you can afford to support the additional credit and feel that it may come in handy, take some time to shop around to find the best deal and card that suits your needs. There is no requirement to accept the first one that is presented to you and there may be a product out there that better fits into your overall financial plan. There are several websites that can assist you in choosing the right card.
The same thing goes for bank accounts and associated fees. You have the right to receive information about fee increases, new account charges, and all costs should be disclosed when you open a new account. If you’ve had your account for a while, it’s worth asking what the fees associated with it are and if there is a better option out there that meets your current usage needs.
If you’re not getting the information you feel you are entitled to or are curious about weighing your options and alternatives, the Financial Consumer Agency of Canada (FCAC) is responsible for protecting consumers of financial products and services and may be able to help. The Agency has tools, tips, and resources to help consumers better understand their rights and responsibilities when dealing with financial institutions.
If you’ve had negative financial consequences from credit increases, fees, or penalties and find they are overwhelmingly adding to your overall debt load, reach out to one of our debt professionals for a free, confidential consultation. We will explore all debt relief options available to you, provide detailed information, and answer all your questions so you can make an informed decision based on your financial situation.